From the “Dutch disease” to “American disease” the road of soft budget constraint

Building a theoretical framework to analyze the “American disease”, the TNT model was extended to the IC model which has a micro-foundation. Through the analysis, we draw the conclusions as follows: the premise of “American disease” the right of issuing reserve currency is monopolized by currency sovereign country and non-credit basis for issuing reserve currency. The direct reason of “American disease” is the inter-period soft budget constraint. The defects of the international monetary system result in the current international global financial crisis; the institutional defects duo to the existing international monetary system based on lacking credit; the solution of “American disease” is improving the credit system construction based on the international monetary system.